40% OF PROPERTY
OWNERS QUALIFY FOR TDSR EXEMPTIONS
Feb 12, 2014
However, depending on refinancing rates, Monday’s fine-tuning of the TDSR by the central bank may impact a smaller percentage of owners as the majority would have refinanced in the last three years with lower interest rates, reckons Credit Suisse.
Its research team believes that competition among financial institutions will play an important factor.
“Post TDSR, banks had raised their spreads taking the view that the borrower would have no choice but to stay with the current bank (refinancing could mean that they breach TDSR or loan tenure limits) and failure to refinance may have had a subsequent knock-on impact on property prices. Therefore, the new measures would see refinancing volumes returning (historically one-third of new loan market), now that TDSR and loan-tenure is no longer a deterrent, although potentially at the cost of banks’ margins.
“While we believe that the majority of refinancing from board-rate structure to SIBOR-pegged loans is mainly done (given the low interest rate environment in the last 3-4 years), we believe there may be a market for floating-to-fixed refinancing in view of rising interest rates and some borrowers looking to capitalize on the lower teaser-rates and therefore consistently rolling their mortgage every three years (to avoid penalties). Thus we estimate that the new measures may impact less than 20 percent of property owners,” added Credit Suisse.
According to MAS, the relaxation of the TDSR is to help borrowers ease their immediate debt servicing burdens and encourage those who are stretched to right-size their loans as early as possible.
Feb 12, 2014
Around 40 percent of homeowners in Singapore are eligible
for exemptions from the TDSR, based on a recent Credit Suisse Proprietary
Housing Survey.
The survey polled about 300 respondents and found that 90
percent own a property, of which 49 percent have a mortgage and 83 percent are
self-occupied.However, depending on refinancing rates, Monday’s fine-tuning of the TDSR by the central bank may impact a smaller percentage of owners as the majority would have refinanced in the last three years with lower interest rates, reckons Credit Suisse.
Its research team believes that competition among financial institutions will play an important factor.
“Post TDSR, banks had raised their spreads taking the view that the borrower would have no choice but to stay with the current bank (refinancing could mean that they breach TDSR or loan tenure limits) and failure to refinance may have had a subsequent knock-on impact on property prices. Therefore, the new measures would see refinancing volumes returning (historically one-third of new loan market), now that TDSR and loan-tenure is no longer a deterrent, although potentially at the cost of banks’ margins.
“While we believe that the majority of refinancing from board-rate structure to SIBOR-pegged loans is mainly done (given the low interest rate environment in the last 3-4 years), we believe there may be a market for floating-to-fixed refinancing in view of rising interest rates and some borrowers looking to capitalize on the lower teaser-rates and therefore consistently rolling their mortgage every three years (to avoid penalties). Thus we estimate that the new measures may impact less than 20 percent of property owners,” added Credit Suisse.
According to MAS, the relaxation of the TDSR is to help borrowers ease their immediate debt servicing burdens and encourage those who are stretched to right-size their loans as early as possible.
Info courtesy -
PropertyGuru
